Mortgage loan delinquencies fall 14%, Iowa among lowest

Lower cost of living, inexpensive real estate factors in Iowa's rating

George Ford
Published: February 13 2013 | 6:00 am - Updated: 28 March 2014 | 11:23 am in
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Iowa has one of the lowest mortgage delinquency rates in country.

The national mortgage delinquency rate declined to 5.19 percent in the fourth quarter of 2012, down nearly 14 percent from 6.01 percent in the final quarter of 2011, according to Chicago-based TransUnion's financial services business unit.

Iowa's percentage of mortgage loans 60 days or more past due was 2.98 percent in the final three months of 2012. North Dakota has the lowest delinquency rate at 1.53 percent.

Iowans historically have very low delinquency rates and total debt on credit cards and mortgages, according to Ezra Becker, director of consult and strategy for TransUnion. The cost of living is lower here, and real estate is less expensive than in many hot growth markets.

During the peak of the mortgage crisis, delinquencies rose nationally by 54 percent in 2007, 53 percent in 2008 and 50 percent in 2009. The subsequent decline has been a slow process with delinquency levels falling 7 percent in 2010, 6 percent in 2011 and dropping another 14 percent last year.

"The national mortgage delinquency rate experienced its largest yearly decline since the conclusion of the recession, though we still remain far above normal levels," said Tim Martin, group vice president of U.S. Housing for TransUnion.

"For the most part, newer vintage mortgage loans are not the reason for the stubbornly high delinquency rate. They are performing relatively well.

"The elevated delinquency levels that we still are experiencing are a result of older vintage loans — borrowers who haven't been making their payments for a rather long time that are still in the system, inflating the overall rate."

Thirty-seven states and the District of Columbia experienced improvement in their mortgage delinquency rates from last quarter. Only three states did not experience mortgage delinquency improvement from last year.

Martin said TransUnion expects the national mortgage delinquency rate to continue falling in the first quarter 2013, though it will likely remain above 5 percent.

TransUnion's forecast is based on various economic assumptions, such as gross state product, consumer sentiment, unemployment rates, real personal income and real estate values.

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